Tesco revival plan fails to fire up FTSE

Supermarket giant Tesco failed to win over investors with its £1bn plan to revive its UK arm today as the grocer followed world markets into the red.

Tesco revival plan fails to fire up FTSE

Supermarket giant Tesco failed to win over investors with its £1bn plan to revive its UK arm today as the grocer followed world markets into the red.

The FTSE 100 Index closed 21.7 points lower at 5745.3 as some traders took profits following strong gains yesterday, while others sat on their hands ahead of a key Spanish debt auction tomorrow.

On currency markets, the pound was up against the US dollar at 1.60 and the euro at 1.22 as documents revealed the Bank of England was leaning away from injecting more cash into its quantitative easing programme.

Tesco shares lost hold of earlier gains to close 2% lower as investors digested chief executive Philip Clarke’s six-point turnaround strategy involving extra staff, new look formats and better ranges.

Panmure Gordon’s Philip Dorgan said the plan looked coherent but warned that its success depended on Tesco “doing 1,000 things 1% better”. The shares were 7.3p lower at 321.1p after starting the session some 2% ahead.

Tesco shares are still around 18% lower than the level seen prior to a profits warning in January and were outpaced today by rivals Sainsbury’s and Morrisons following gains of 0.6p to 309.8p and 2.2p to 298.3p respectively.

Elsewhere in the top flight, a trading update helped silver miner Fresnillo top the blue-chip risers board, up 3% or 51p to 1624p, after gold production beat expectations in the first quarter of the year.

Others on the front foot included BHP Billiton, which cheered 16.5p to 1943p.

Scottish broadcaster STV closed more than 1% higher after it said it expected airtime revenues to return to growth in May after a drop in April.

The group, which has been buoyed by a further commission of 20 episodes of Celebrity Antiques Road Trip for BBC2, stood 1.4p higher at 114.5p, while fellow broadcaster ITV fell 0.3p at 87.8p.

In other corporate results, Chef & Brewer owner Spirit Pub Company was 2p lower at 53.5p after announcing a 7% rise in half-year profits to £20m.

The business, which demerged from Punch Taverns last year, has been boosted by the success of its refurbishment programme but warned it is mindful of ongoing economic uncertainty and consumer pressures.

It should benefit from holidays for the Queen’s Diamond Jubilee – unlike Speedy Hire, which warned the June celebrations and disruption caused by the Olympics will impact demand for its equipment this summer.

Investec Securities cut its forecast on Speedy’s profits for 2012/13 by £2.5m, although Speedy’s shares were 1p higher at 27.8p as the company said overall trading remained in line with expectations.

The biggest Footsie risers were Fresnillo up 51p at 1624p, Severn Trent ahead 50p at 1656p, Weir Group up 41p at 1744p and Tullow Oil ahead 35p at 1518p.

The biggest Footsie fallers were Man Group down 7.9p at 99.6p, Resolution off 14p at 225p, Legal & General down 6p at 118.2p and BAE Systems off 14.6p at 289.2p.

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